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Saudi Arabia's non-oil private sector growth slows in December, PMI shows

ABU DHABI - Saudi Arabia's non-oil private business sector remained firmly in growth territory in December ‍although the pace ‍of expansion eased to its slowest in four months, and ​new order growth continued to decelerate, a survey showed on Monday.

The seasonally adjusted ⁠Riyad Bank Saudi Arabia Purchasing Managers' Index (PMI) fell to 57.4 in December ⁠from 58.5 in November, ‌indicating a cooling of growth for the second consecutive month. Despite the slowdown, the headline PMI reading was slightly stronger ⁠than its long-run average of 56.9.

PMI readings above 50.0 indicate growth in activity, while those below point to contraction.

Output levels across non-oil businesses rose sharply, driven by increased new business, ongoing projects, ⁠and heightened investment spending. However, ​the rate of growth was the least pronounced since August.

The new orders subindex retreated to ‍61.8 in December from November's 64.6 reading but the pace of expansion was the slowest ​in four months. Firms cited improving economic conditions and successful marketing campaigns as key drivers but expressed concerns over market saturation.

"Export demand recorded a marginal increase for the fifth consecutive month, but the latest rise was the weakest in this sequence, suggesting that external demand remains supportive but uneven," said Naif Al-Ghaith, Riyad Bank's chief economist.

"Overall, demand conditions point to resilience rather than acceleration as firms navigate a more competitive environment," he added.

Employment growth ⁠remained strong, with companies continuing to expand their ‌workforces. However, inflationary pressures intensified, with input prices rising sharply due to higher purchase costs, leading to increased output prices.

Business confidence for the ‌year ahead ⁠was subdued, dampened by concerns over rising market competition, with only moderate expectations for ⁠future growth.